Check out today's post on Politico. The author asserts that financial reform is uneven, that pending Congressional legislation has modest impact on hedge funds.
Wall Street has taken its lumps in Washington recently and Goldman Sachs has become everyone's whipping boy, but hedge funds and private equity firms have escaped relatively unscathed.
I don't get the disparity. Hedge funds, through leverage, can inflict major damage on economies. John Paulson's fund made $1 billion dollars on Abacus 2007-AC1 -- the casino bet that cost two banks a total of one billion dollars. Other hedge funds structured similar trades, like Magnetar, which profited from the collapse of subprime.
What's worse -- alleged fraud by an investment bank or unchecked profiteering by hedge funds using toxic securities?
The worst part of financial reform is that our Senators are hardly free from conflicts of interest -- ironic because conflicts of interest are at the heart of the charges against Goldman Sachs. Here's more from Politico:
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